Imperial Sees Record Quarterly Production but Profit Down on Lower Prices

Imperial Oil Ltd. logged a three-decade-high output for the fourth quarter of 2023 but weaker commodity prices dragged down a strong operational performance, the Canadian integrated energy company has reported.

“Upstream production in the fourth quarter averaged 452,000 gross oil-equivalent barrels per day, the highest quarterly production in over 30 years when adjusting for the divestment of XTO Energy Canada, with full-year production of 413,000 gross oil-equivalent barrels per day”, it said in a recent news release. Imperial had given up a net production of 140 million cubic feet a day of natural gas and 9,000 barrels per day (bpd) of petroleum, condensate and natural gas liquids when the company along with partner Exxon Mobil Corp. sold XTO Energy Canada ULC in 2022 to Whitecap Resources Inc. for $1.9 billion in cash.

The record production was thanks to Alberta province’s Kearl oil sands, which reached their biggest quarterly and yearly output at 308,000 bpd and 270,000 bpd respectively.

Imperial expects to further ramp up production later this year with what it says is the industry’s first ever solvent-assisted steam-assisted gravity drainage project, which is expanding its Cold Lake oil sands production in Alberta. “The project is expected to achieve 15,000 gross barrels per day of production at full rates and also reduce greenhouse gas emissions intensity by up to 40 percent compared to existing steam processes”, it said.

Calgary, Alberta-based Imperial reported CAD 1.4 billion ($1 billion) in net earnings for the October–December quarter, down from CAD 1.7 billion ($1.3 billion) for the same period 2022 and CAD 1.6 billion ($1.2 billion) for the preceding quarter of 2023. Annual net profit dropped to CAD 4.9 billion ($3.6 billion) from CAD 7.3 billion ($5.4 billion).

Imperial achieved “the largest planned turnaround in Sarnia site [Ontario refinery] history” and hit a refinery capacity utilization rate of 94 percent with a quarterly throughput of 407,000 bpd. “Fourth quarter results reflect strong operating performance, which was more than offset by weaker commodity prices”, the press statement said.

Explaining its annual results, Imperial noted energy markets started to normalize last year from their high in 2022, when oil and gas prices surged following Russia’s invasion of Ukraine. “While demand for liquids set a record in 2023, supply continued to grow”, it said.

“In the second half, crude oil prices increased as a result of strong demand, tight inventory levels, and ongoing actions by OPEC+ oil producers to limit supply”, Imperial added referring to the Organization of the Petroleum Exporting Countries Plus alliance, which includes Saudi Arabia and Russia.

“In addition, the Canadian WTI/WCS spread began to weaken in the fourth quarter, but remained in line with 2022 on an annual basis”, it said referring to the pricing difference between Canada’s heavy crude benchmark Western Canada Select and the United States’ light crude benchmark West Texas Intermediate. “Throughout 2023, strong demand for gasoline and distillate combined with low inventories kept refining margins strong, but short of 2022 levels on an annual basis. In the fourth quarter refining margins dropped due to higher inventory and lower seasonal demand”.

Cash flow from operating activities skid to CAD 1.3 billion ($962.1 million) for the fourth quarter of 2023 from CAD 2.4 billion ($1.8 billion) for the third quarter and CAD 2.8 billion ($2.1 billion) for the corresponding period the prior year.

Imperial ended the year with CAD 864 million ($639.5 million) in cash and cash equivalents.

It paid CAD 4.9 billion ($3.6 billion) to shareholders in 2023 through dividends and stock buybacks and has now raised its quarterly dividend by 20 percent to 60 Canadian cents per share.

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